MONEY COMMENT
No More Stamp Duty Fiddles

By Jane Mack (TMFJane)
December 1, 2003

Until today it was possible to reduce stamp duty costs on house purchases by paying more for fixtures and fittings and a little less for the property. Not any longer - today sees the introduction of the new Stamp Duty Land Tax.

It's just a name for the old form of stamp duty payable on property purchases but it means that homebuyers could be facing larger bills.

Homes costing between £60,001-£250,000 attract stamp duty of 1% of the cost of the property whereas those between  £250,001-£500,000 attract stamp duty of 3%.

So, a house costing £250,000 would result in a bill for £2,500 but if it cost just £5,000 more (£255,000), the buyer would be looking at whopping stamp duty bill of £7,650. It's not surprising buyers would offer an inflated price for the duty-free fixtures and fittings in order to bring the cost of the house down to below the crucial threshold.

Unfortunately, the new law means that from today, homeowners will have to file a self-assessment form outlining details of the purchase within 30 days of completion. If the Inland Revenue thinks the fixtures and fittings have been overvalued in order to avoid paying a higher rate of stamp duty, they'll be able to send you a bigger bill and fine you too if they think you've deliberately tried to fiddle the system.

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